Jan 17, 2017

UnitedHealth Group hits it big despite Obamacare meltdown

Even though UnitedHealth Group has lost more than $1 billion on individual Obamacare plans, the country's largest health insurer and services company is humming along just fine.

The big numbers: The conglomerate said Tuesday it had $185 billion in revenue in 2016 and expects almost $200 billion this year. That means UnitedHealth, by itself, controls about 5.5% of the U.S. health care economy. UnitedHealth's profit surpassed $7.2 billion, up from $5.8 billion in 2015.

UnitedHealth had a relatively small footprint in the Obamacare marketplaces before bailing on them earlier this year. The company has historically made most of its money from selling health plans to employers, and continues to do so. But Medicare Advantage is representing a larger piece of its pie, and executives expect Medicare membership will continue to grow this year.

But that's not all: Optum, UnitedHealth's subsidiary that sells data analytics and pharmacy benefits and owns providers, is a cash cow. In the fourth quarter, Optum's operating profit actually surpassed the UnitedHealthcare insurance arm. The company invested even more in Optum with its recent $2.3 billion takeover of Surgical Care Affiliates, a chain of surgery centers that specializes in profitable outpatient procedures.

Mum on the future: CEO Stephen Hemsley, known for being tight-lipped, said on an earnings call Tuesday he wouldn't speculate on what will happen to Obamacare, but he noted the company has routinely advocated for affordable coverage and a "simpler, state-based health care system." That could include high-risk pools and more catastrophic coverage with even higher deductibles — policies that Republicans have favored.

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